Ok, you have taken the risk and decided to set up your own business. You employ good staff, your customers love them, and everybody seems happy, including you as their employer. Then that fateful day comes, your employee leaves and now you find that a third of your customer base has moved with that employee. This can happen whether your business is that of a beauty salon or that of an accountant. There are other industries like IT where you as the employer have to ensure that employees maintain secrecy in respect of the work they do, products or services they supply, should they leave your employment.
What is an employer to do?
The first thing you must do as an employer is decide whether you are vulnerable to any of the attacks that we have described above. If you are then, secondly, you must protect your firm, your livelihood, by restrictive covenants which in simple terms have the aim of restricting employees who leave your employment from taking your customers, or using information gained in the course of their work for you. Restrictive covenants are usually provided for in the contract of employment issued to the employee.
But do these restrictive covenants have any value, you ask? The narrower the restrictive covenants are drawn, the more effective they are in practice, and in law. If, for example, you provide in the contract that the employee may not work for a competitor within the Irish state for a period of twelve months, that restrictive covenant is likely to be struck down by a court. If in the case of, say, a beauty salon based in Kilkenny City, you provide that an employee who leaves may not poach your customers to work for a rival based in Kilkenny City, and limit that restriction to six months, then it is more likely to be upheld by a court.
How do you legally enforce these restrictive covenants? We very often come across situations where the employer is so concerned about the commercial and indeed financial damage that an exiting employee can do, that we are retained to threaten and issue proceedings against the employee seeking an injunction. This is a court application that will be heard very quickly by the courts, and will seek to ensure that the employee that has left your employment is bound by the restrictive covenants that he agreed to when signing the contract of employment.
If you have any queries in relation to any issue raised then do not hesitate to get in contact with me.